Results-Based Barriers, Robbing Peter to Save Paul Money, and the Power of Bad Data

Plus: A scathing Rhode Island audit, and more management news

Here's the second installment of questions we're trying to answer for GovPerformance, the new organization we're helping get off the ground. We'll also be sharing the answers with B&G readers. Here's the question: We know that it's difficult for governments to use results-based information to improve programs, allocate resources, make better policies and so on. Can you share with us any theories — or better yet, examples — of why that's the case?

We happily still welcome your thoughts on the first question (whether your government uses results-based info and how), as well.

Saving government money appears to be the mantra for the decade. But we continue to be surprised at the lack of understanding that nearly every dollar governments save is ultimately coming out of some other organization's pockets. For example, cutting down on Medicaid costs by reducing unnecessary emergency room visits sounds good. But that means a decrease in emergency room dollars for the hospitals. Saving money by cutting down on fuel consumption for public vehicles equals lower gas tax revenues to help maintain and build the roads. Balancing budgets by cutting back on pensions? Pensioners have to live on less, and spend less.

Are any of these bad ideas? No. But don't expect any major cost-saving effort to take effect free of pushback. The money cities and states save used to be somebody else's.

The power of bad data is remarkable. Once it enters the public's consciousness, it lives on like some kind of Frankenstein's monster — big and scary and entirely misunderstood by the townspeople.

Consider Wisconsin. Citizens there were outraged when they heard about the huge taxpayer costs stemming from last year's pro-union demonstrations at the state Ccapitol building, in the wake of Gov. Scott Walker's efforts to restrict collective bargaining. The state Department of Administration (which wanted to restrict access to the statehouse) indicated that clean-up and damage repair from the months-long demonstrations would cost the state up to $8 million.

Well, now the Administration Department has come up with the actual figure, and it's considerably lower: "about $200,000" or a little more, according to the Beloit Daily News. "Despite this dose of reality," the paper opined, "the myth still exists out there that rampaging protesters all but destroyed the Capitol. Such accusations turn up in our letters to the Public Forum and website comments regularly. We have little hope [that] release of the true numbers will turn down the volume of the myth-makers."

Rhode Island woes: You'd have to search hard to find an audit report as overwhelmingly critical of a crucial government service as the one released earlier this month regarding Rhode Island's internal financial systems. As the state auditor's office indicated, "Our report includes 38 findings that we considered significant deficiencies or material weaknesses in internal control over financial reporting or other matters required to be reported by Government Auditing Standards." These internal controls are essential if a state is going to uncover false financial statements in a timely way.

The report goes on to say that many of the weaknesses exist in the statewide accounting systems, information systems security, the Department of Revenue, the Department of Transportation and the Department of Labor.

What's the underlying problem? According to the report, "Most of the control deficiencies reported herein are conditions that have existed for several years. Many continue due to a lack of investment by the State in the operation and security of its information systems. The State has struggled in recent years to maintain its complex information systems environment without sufficient resources. The State needs to address these issues through a carefully designed plan that ensures it can maintain its current information systems."

We wonder how many performance evaluators agree with this quote from a member of their corps: "When I'm not with the goal I love, I love the goal I'm near." (Thanks to Shoshana Sofaer of Baruch College for passing this along.)

Oklahoma's capital asset structure is "inconsistent, underfunded and has essentially failed the citizens, who deserve better," according to a just-released state audit report. Apparently, the state doesn't even have a clear idea what its capital inventories are. And according to the auditor, maintenance is "given priority only when conditions pose an emergency or serious threat to the public's health and safety."

In an introductory note from state auditor Gary A. Jones, addressed to the citizens of Oklahoma, the language is remarkably strong. As Jones writes, "The short-sidedness of legislative leadership and lack of commitment to address capital asset needs has resulted in deteriorating buildings, government service disruptions and increased risk to the public health. The absence of planning and inadequate funding for what could have been routine maintenance expenditures has now escalated into millions. If you don't change the oil in your car, what do you expect to happen?"

That's a good question for all cities and states that defer maintenance as though there was no long-term cost.

New companies create the majority of net new jobs in the economy. As a result, it's no surprise that many local leaders publicly extol the virtues of small businesses. "Yet," according to the National League of Cities (NLC), "when it comes to supporting entrepreneurs in practice, many local leaders are unsure how they can make a real impact."

With that in mind, the NLC's Center for Research and Innovation recently came out with a toolkit that attempts to answer the question, "How can local governments support entrepreneurship and small businesses?" There's very valuable material in the report. We recommend it.

Speeding up government services is a good idea, right? But what happens when quality suffers, as can easily be the case when you're saving time by eliminating quality reviews? This is just one example in which government management is kind of a darned-if-you-do, darned-if-you-don't process.

Another example: Pre-K education has been expanding at a reasonably steady pace over the last decade. But as the numbers have grown in a declining economy, there's been less cash available for each student. "The 2010-2011 funding cut," according to a new report from the National Institute for Early Education Research, "coupled with modest enrollment growth, sent national per-child spending down sharply, by $145 per child from the previous year." Thanks to those cutbacks, according to Education Week, many states, including California and New York, have eliminated routine site visits to monitor quality.

More? Consider tax amnesty programs. A number of states have raised large sums of cash by forgiving all penalties on unpaid past taxes. But could that mean that people will be less inclined to pay the appropriate bill in a timely fashion, and just wait for the next amnesty period? Some people think so: "If you run tax amnesties too often," says Kim Rueben, senior fellow with the Tax Policy Center, in California Watch, "you're actually incentivizing people to not pay on time because they know that there will be an amnesty coming up, and they can always get back into the good graces of government."

Examples roll on and on. We're dubbing this the "city joggers phenomenon," in honor of all our friends who claim great health benefits of tramping around Manhattan, and then wind up limping as a result of injuries they suffer along the way.

Democratic California Gov. Jerry Brown has offered up his budget, and Republicans in the state have come up with their own option. So far, that's pretty much a dog-bites-man story. But wait. The Republican alternative includes an assumption that the state will save $220 million because Gov. Brown will win "more lawsuits over past budget cuts than he predicts," according to the Sacramento Bee.

Pretty nice of legislators to publicly proclaim that the governor is underestimating his own accomplishments.

With all the men and women who are trying to figure out what's going on in state and local government, there's only a handful who really get it. John E. Peterson, a stellar professor at George Mason University, was one. He passed away, at 71, on April 4th of a heart attack. John's column in Governing has been a must-read for us for years. And on the occasion when we've used him as a source for our own work, we've been aware of the immense depth and breadth of his understanding. As Governing publisher emeritus Peter Harkness said in an email, "He was one of our first columnists and one of the best, with a sharp mind and a gift for writing clearly and incisively. He also was a great guy."